On March 17, 2020, FERC accepted revisions to the PJM Interconnection LLC (“PJM”) Open Access Transmission Tariff (“Tariff”) to establish enhanced procedures for compliance with the North American Electric Reliability Corporation (“NERC”) reliability standard CIP-024-2. A majority of FERC Commissioners found that the Tariff revisions, captured in a new proposed Tariff Attachment M-4, appropriately balanced transparency obligations in transmission planning with the need to maintain strict confidentiality regarding the names, locations, and vulnerabilities of CIP-014-2 facilities. In a separate opinion, Commissioner Glick dissented, in part, arguing that the proposal inappropriately categorized Attachment M-4 projects as a subset of “Supplemental Projects” under the Tariff and PJM Operating Agreement. Commissioner Glick argued that the proposal improperly subjected such projects to non-regional cost allocation, contrary to cost-causation and other transmission planning principles expressed in Commission Order Nos. 890 and 1000.

In addition to regional transmission projects planned through the PJM Regional Transmission Expansion Planning (“RTEP”) process, certain kinds of “Supplemental Projects” under the PJM Operating Agreement are identified and planned through individual transmission owners’ planning processes. A Supplemental Project is a transmission expansion or enhancement that is not required for compliance with various PJM criteria including system reliability.

In 2014, FERC approved Reliability Standard CIP-014-2 to identify and protect information regarding critical transmission facilities essential to grid reliability, among other things. In particular, sensitive or confidential information developed pursuant to CIP-014-2 must be protected from public disclosure. The PJM Transmission Owners asserted that the enhanced security requirements of CIP-014-2 facilities are “incompatible” with many of the preexisting transparency obligations inherent in PJM’s RTEP process, the usual Supplemental Project planning processes, and the Commission’s Order Nos. 890 and 1000.

Accordingly, on January 17, 2020, Appalachian Power Co. and the PJM Transmission Owners (through PJM) proposed a separate transmission planning process to evaluate projects that could better eliminate the “criticality” of transmission facilities identified pursuant to CIP-014-2. Under the proposal, such projects (called “CIP-014 Mitigation Projects”) would be considered a type of Supplemental Project and processed separately from PJM’s RTEP, although with consultation with PJM and affected state commissions. In addition, cost recovery for any CIP-014 Mitigation Project would not occur until the project is made public (i.e., upon completion of the project and removal of the facility from the CIP-014-2 critical facilities list). According to PJM Transmission Owners, the proposal was developed through extensive stakeholder outreach, applies to less than 20 critical facilities, and sunsets five years after Commission approval. PJM Transmission Owners requested expedited action, and an effective date of March 17, 2020 for the proposal.

Those protesting the filing argued that the proposal should be rejected as unjust and unreasonable because it provided for insufficient oversight by stakeholders, raised cost recovery concerns, threatened undue discrimination from alleged transparency deficiencies, and impermissibly localized, instead of regionalized, cost allocation. In response, PJM Transmission Owners and other supporters, argued that the proposed revisions appropriately balanced the obligations to maintain the confidentiality required by CIP-014-2 and FERC’s transmission planning requirements. They further asserted that CIP-014 Mitigation Projects are exempt for regional cost allocation requirements, due to their status as “Supplemental Projects” under PJM’s Tariff and Operating Agreement.

On review, the Commission found that the filing was just and reasonable and accepted the revisions effective March 17, 2020 as requested. Among other things, FERC noted the proposed revisions appropriately balanced the need to maintain strict confidentiality with stakeholders’ interests in transparency regarding the PJM Transmission Owners’ planning of CIP-014 Mitigation Projects. FERC also agreed with PJM Transmission Owners that CIP-014 Mitigation Projects constitute a subset of Supplemental Projects, as defined by the PJM Operating Agreement, and thus, are appropriately planned by the PJM Transmission Owners, rather than by PJM.

Commissioner Richard Glick dissented in part. Commissioner Glick argued that, although he supported mitigating the risks posed to critical facilities identified pursuant to CIP-014-2, such facilities provide regional benefits, rendering them suitable for regional, and not localized, cost allocation. Commissioner Glick argued that a better alternative to the proposal would be for PJM to plan for CIP-014-2 facilities, subject to all appropriate procedural and confidentiality safeguards, to ensure better compliance with cost causation principles.

Click here to read the Order and Commissioner Glick’s partial dissent.

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